On May 20, 2014, the First District Court of Appeal in Jong v. Kaiser Foundation Hospitals, issued a decision affirming the summary judgment granted as to one of the individual class representatives in a putative class action for overtime pay resulting from off-the-clock work. As explained below, the decision is helpful to employers in providing an example where an employer was not on constructive notice of off-the-clock work and, therefore, was entitled to summary judgment. The case also cites favorably to several federal FLSA decisions in which the employer won summary judgment on an off-the-clock claim.

The Facts

Defendant Kaiser employed approximately 170 Outpatient Pharmacy Managers (“OPMs”) in its California pharmacies. Before November 2009, the position was treated as an exempt position with OPMs receiving a fixed salary irrespective of the hours they worked. Following the resolution of a class action challenging the exempt status of the OPMs (Lopez v. Kaiser), Kaiser undertook a reorganization of the outpatient pharmacy operations that included reclassifying most of the OPMs as hourly, non-exempt employees who were required to clock in and out each day to record their time.

Three former OPMs brought suit in January 2012 alleging that, following the 2009 reorganization, OPMs were not given sufficient increases to their budgets or otherwise provided the tools necessary to perform their jobs within 40 hours and eliminated or minimized their recorded overtime hours by working off-the-clock. Following discovery and the deposition of the plaintiffs, Kaiser moved individually for summary judgment as to each plaintiff. In December 2012, the trial court granted the motion as to one of the plaintiffs, Henry Jong, on the grounds that he failed to proffer any admissible evidence that would raise a triable issue of fact that Kaiser either knew, or should have known, that he worked hours that he did not record.

As important to the appeal, Plaintiff admitted all of the following concerning his alleged work and pay: (1) he knew of Kaiser’s written policy that OPMs should be clocked in whenever they were working; (2) he was always paid for time he recorded on Kaiser’s recording system, including overtime hours; (3) he was instructed he was eligible to work and be paid for overtime hours; (4) there was never an occasion when he requested approval to work overtime that was denied; (5) there were occasions when he worked and was paid overtime even though he did not seek pre-approval; (6) no supervisor ever instructed him to perform work before he clocked in or after he clocked out or otherwise work off-the-clock; (7) he signed an attestation form shortly after he was reclassified promising he would never work off-the-clock; and (8) he knew of no manager who was actually aware that he was working off-the-clock.

Analysis of the Court of Appeal

In face of his admissions that he was never instructed to work off-the-clock, he knew he was not supposed to work off-the-clock, and that he intentionally concealed from management that he was working off-the-clock, plaintiff asserted that he still raised a triable issue of whether Kaiser “should have known” that he was working off-the-clock. First, he noted that depositions of 18 OPMs in the earlier Lopez litigation revealed that the OPMs regularly worked an average of 48 hours per week, while Jong recorded far fewer hours. Second, he noted that on a number of occasions he deactivated the alarm in his pharmacy ten or fifteen minutes before he clocked in. Had Kaiser compared the alarm records to his time clock records, Jong contended that management would have seen gaps showing he was working before he clocked in.

The Court of Appeal agreed with the trial court that neither piece of evidence created a basis to avoid summary judgment. At most, the 18 OPM depositions would provide notice that, when OPMs were exempt and not instructed to record their time accurately, they routinely worked 48 hours. That evidence had no tendency to prove that OPMs in general violated Kaiser’s instructions, that came in 2009, not to work-off-the clock, let alone constituted evidence that Kaiser knew Jong could not perform his job duties in the time he recorded.

As for the alarm records, even putting aside the fact that Kaiser did not use them for timekeeping purposes, if Kaiser had performed an audit, it merely would have showed some periods where Jong was in the pharmacy before clocking in, not that he was working during those gaps (as opposed to getting in early to enjoy a cup of coffee, for example). The Court of Appeal, citing See’s Candy Shops, Inc. v. Superior Court, 210 Cal. App. 4th 889 (2012), recognized that Jong being on premises before the start of his shift did not trigger an obligation to pay him if he was not working during that period. In sum, because the records did not give notice of Jong workingoff-the-clock, they did not raise a triable issue of fact either.

Why the Case is Helpful to Employers

In reaching its conclusions, the Court of Appeal favorably cited a number of federal cases that had not previously been adopted by published California decisions. For example, the case cited the Northern District of California decision of White v. Starbucks Corp. 497 F. Supp. 2d 1080 (N.D. Cal. 2007), where the district court granted summary judgment based on an absence of evidence that the employer was aware that the plaintiff was working off-the-clock, even though the employer had some knowledge that other employees may have occasionally worked off-the-clock. The court also cited with approval three federal appellate cases, Brown v. Scriptpro, LLC, 700 F.3d 1222 (10th Cir. 2012), Kellar v. Summit Seating, Inc. 664 F.3d 169 (7th Cir. 2011), and Newton v. City of Henderson 47 F.3d 746 (5th Cir. 1995) which each affirmed summary judgment for the employer in cases where the employee violated the company’s instructions to accurately record all time in the timekeeping system. These citations undercut the notion that these federal cases discussing off-the-clock claims only address FLSA issues or otherwise have no application to California Labor Code claims.

More generally, the Jong case should be helpful in opposing class certification in many off-the-clock cases because it highlights that the question of liability in an off-the-clock case depends on the employer having actual or constructive knowledge of a particular plaintiff working off-the-clock to support liability as to that plaintiff. After all, in Jong, summary judgment was granted as to only one class representative, not the other two, and the difference depended on particular facts as to notice the employer allegedly had of the different employee’s purported off-the-clock work habits. Employee plaintiffs will be hard pressed to argue that an employer’s mere knowledge that one employee worked off-the-clock establishes that the employer “should have known” an entire class of employees was working off-the-clock.

Finally, the case underscores the importance of having strong policies prohibiting off-the-clock work. Kaiser, in this action, not only promulgated express policies prohibiting off-the-clock work, but it required employees to sign individual attestations that they would not work off-the-clock. Employers should review their own policies to ensure that they have given strong warnings to employees against working off-the-clock. It could be the determinative factor to winning summary judgment in a case.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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